maybe in 2013, pimco's call is for recovery. in fact the first time in seven years pimco is expecting an upswing in the housing market. if it in fact continues then the wealth created in housing could become more important to the economy and sustained movement in financial markets but without that it will be more difficult to believe that markets can move alone based on the federal reserve. >> there is a significant debate in the market right now as to whether there is a bond bubble. you say no. one of my traders steven weis says yes. weis, why do you believe there is a bond bubble and let's have a healthy debate on where we stand right now. >> i'll give you a few reasons. we had a guest on yesterday. and i asked the question, when have you ever seen rates stay this low this long a period of time? and she couldn't come up with an answer. the reason is there is no answer to it. so here's how i look at it. markets are not like wars. you don't wake up one day and all of a sudden the white flag is being raised and they surrender. th

bill joins me exclusively from pimco headquarters in california. good to see you. >> thank you, maria. >> thaepgs for joining us. if not the stock market, what are you betting on? >> we are betting on the stock market. we just think it's a baby bull, maria, as opposed to a magnificent bull in spain where they award two ears and a tail for the big fight. we think this is the return of 4% to 6% as opposed to double digits which is what we've experienced in the past. we like stocks. bob pisani has it right in terms of his agenda, if fulfilled, but the fact is that credit, you know, at some point runs into a dead end in terms of its ability to engender a real froet and profits, and so we're basically at that point in our view. we've expanded credit from 3 trillion to 56 trillion, you know, since the early 1970s and the ability of credit to generate more growth and wealth is reaching limits. >> right. let me ask you this. i mean, let's talk about the downside risks of all the cheap money. we know why this market is rallying as much as it is. there are v

pimco is shading it to a lower side but basically close to index.1 to 2% opposed to 3-4%. i think that's the greatest risk. >> i want to go back to equi equities, you some what famously wrote in august, equities are dying, boomers can't take a risk and gen x believes in facebook and the other has no money. have you changed your view? >> i think that's true. we can speak to january on the great rotation, one month type of thing, typically money comes in in those markets. it's not a downer in terms of returns but a downer in terms of willingness in the ability and demographic influences and forces to present a change to stocks. we're seeing -- what we're going to see demographically, a lot of boomers getting older and older and frankly boomers like certainty, they like stability, they like a fixed income type of return. that's not pimco's definition. >> you don't think if the ecky market continuecky -- equity market continues at some point will say, i missed this train, i have to get on it. >> they will at the margin. let's face it they've been burned

susie: our guestghniilto bt, go tonit, bill gross, founder of pimco. >> susie: shares of ralph lauren surged almost 6% today after the upscale retailer reported robust results for its holiday quarter. the 28% increase in profits was better than wall street expected. and, one of the reasons behind those robust results also was a surprise. suzanne pratt reports. >> reporter: this is a large part of ralph lauren's manhattan retail presence. two magnificent stores on opposite corners in one of the world's most expensive zip codes. but it's not what's happening in ralph lauren's u.s. stores that is getting attention today. it's the pickup in the luxury retailers' business across the pd that has some people scratching their heads. the iconic american brand today credited the eurozone in part for its strong earnings. the company also issued a rosier forecast for this year, saying its european business is probably better than we expected. but, retail expert howard davidowitz says don't be fooled: europe's economy is still in the toilet. lauren's business is unique. >> ralph lauren is gaining

the founder and co-chief investment officer of pimco, the giant bond fund, has just come out with a gloomy forecast, warning investors of a "credit supernova". >> susie: that sort of sounds like a sci-fi movie. but reading your report, you're trying to tell investors to stay out of the bond market. really interesting because you run the world's biggest bond fund. what are the dangers that you see? >> well, i wanted to draw attention, susie, to the credits and the potential negative aspects of it and i called it a super nova. credit meaning government debt and corporate debt and household debts, it could be student loans or mortgages or credit cards, expanded from $3 trillion in the '70s, to about $56 trillion now. and normally investors and economists assume the more credit, the better. but ultimately, there are negative aspects to it. and one of which is higher inflation. the second of which is rather unhistoric and low returns on savings. we have bond yields in the 1% to 2% category, where historically, they would be 3% to 4%. there are negative aspects to this credit expansion which the

. >>> pimco, don't snooze, don't snooze. currency can be fun, folks.simon was saying, get ready for a smart watch from apple. maybe. lots of talk. lots of speculation. how much money could they really make? all those things coming up up on screens, guys. top of the hour. ty, back to you. >> oh, sorry. >> don't worry. i look very similar to ty. a new crop of exchange traded funds could be about to help you. bob pisani has exclusively been inside etfs all day. largest etf conference in the world, in hollywood, florida. this is hollywood, on the east coast, not the west coast, bob. >> and it is just as good as hollywood on the west coast. any time there, simon. thank you very much. 1300 investment advisers at largest conference in the world. i caught up with tom from etf trends. there is a lot of interest in investing outside of the united states. >> overseas, fixed income. huge on inflation. huge on currency. a lot of choices here in the u.s. but when you look overseas, you not only get diversification and yield but protection against fallen currency in

the founder and co-chief investment officer of pimco, the giant bond fund, has just come out with a gloomy forecast, warning investors of a "credit supernova". >> susie: that sort of sounds like a sci-fi movie. but reading your report, you're trying to tell investors to stay out of the bond market. really interesting because you run the world's biggest bond fund. what are the dangers that you see? >> well, i wanted to draw attention, susie, to the credits and the potential negative aspects of it and i called it a super nova. credit meaning government debt and corporate debt and household debts, it could be student loans or mortgages or credit cards, expanded from $3 trillion in the '70s, to about $56 trillion now. and normally investors and economists assume the more credit, the better. but ultimately, there are negative aspects to it. and one of which is higher inflation. the second of which is rather unhistoric and low returns on savings. we have bond yields in the 1% to 2% category, where historically, they would be 3% to 4%. there are negative aspects to this credit expansion which the

pimco's bill gross will be our special guest.a break, that's right dow futures up 93 points at this level. that's going to wipe out the losses from the last couple of days. we'll be right back. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. [ male announcer ] from the way the bristles move to the way they clean, once you try an oral-b deep sweep power brush, you'll never go back to a regular manual brush. its three cleaning zones with dynamic power bristles reach between teeth with more brush movements to remove up to 100% more plaque than a regular manual brush. and even 76% more plaque than sonicare flexcare in hard to reach areas. oral-b deep sweep 5000 power brush. life opens up when you do. we all work remotely so this is a big deal, our first full team gathering! i wanted t

so let's bring in founder of pimco. bill, you clearly believe this is not going to end well. to know in your crystal ball of when it might end? >> well, that is hard to know, brian. you know, it speaks to alan greensp greenspan's original question when he asked, how do we know when asset prices are irrationally exuberant, when ask z it end? interestingly in 1996 the dow was at 6,000 and pes at 12 times. it was a little bit early and hopefully on that a little bit early in terms of timing. i don't think it ends right now but i do think as you suggest through my quote that, that prices are irrationally elevated. and that yields are irrationally lower than they should be and so at some point, we have to move back to normal as ground. >> is the stock market and giant bubble? >> i don't think so. we can look at it in a number of ways. the pes around 14 to 15 times. forward pe is analyst like to quote is around 12 times. yield is 2%. you know, you can get growth plus yield from global companies at 3% plus. so you know, that's not irrational relative to a ten-year treasury. 1.85%. b

pimco wants to make it easier tore to you be in the currency market without being glued to your computer 24/7. the etf lists tomorrow under the appropriate ticker frox. let's bring in scott mather. co-manager of the currency strategy etf. he is in florida at inside etfs conference. largest conference of its type on the planet. we have been all day long, well, bob pisani has, lucky dog that he is. scott, why this, why now? >> well, we think it is the perfect time for investors to think about foreign currencies. the dollar has been deappreciating anyway at a pretty rapid clip over the last decade. this is a way for investors to pick a basket of currencies without picking up other dogs. most people are aware that other currencies have had similar problems and worst problems in the dollar. we are avoiding those and actively putting together a diversified portfolio we think will do well short term and long-term versus the dollar. >> this is basic lay vet against the u.s. dollar, right? opposite of a vote of confidence in the u.s. dollar? >> well, that sounds very anti-american, in that contex

then we had a twitter, tweet comes out from bill gross from pimco.is better possibility that bond buying of the fed and the money printing might end before 2013. we have folks saying and i'm going to quote milan moran, a economist, the minutes show committee far less unified than any other time in the past few years. do you agree? >> not very much. there was one word, i sort of looked at to anything to get excited about. said many participants expressed concern. if that had said a number about participants expressed concern i think it would essentially be duplicating the previous meeting. david: one word in the fed means a lot, does it not? >> not as much as the markets take it to be. it means something. a number, when it says many, that is probably, i don't know, eight, nine? but it is not three. that's for sure. david: right. >> you get this very small nuance of difference. markets do what they do is overreact to every stimulus, up or down. if you asked me, do i think this means that there's much of a chance, a nontrivial chance that these asset pu

to speak on the economy today and our guest host this hour will be the former managing director at pimco. he's currently the share of global societies of fellows. and also we have rebecca patterson. we've got a lot to did you discuss with them. before we do that, we're going to head over to michelle who has the morning headlines. >> thank you for that, andrew. usair and nmr are set to meet. boeing completed what it called a, quote, uneventful test flight of the 787 dream liner on saturday. it was the company's first test since the airlines were grounded more than three weeks ago. >>> carnival cruise ship in the gulf of mexico will need to be towed to port. carnival's triumph, as it was called, was heading back to galveston, texas, when the fire occurred. the ship's extinguishing system kicked in, no injuries were reported. >>> let's get over to ross westgate and kelly evans -- oh, it's ross westgate standing by. ross, there's big market news and big news out of italy. do we know why and what's happening here? >> an announcement has been confirmed from the vatican. pope benedict is due to

and the bond king over at pimco has been weighing in with tweets. yes, bill gross tweets. after the g-7 meeting, pimco's bill gross who is widely followed when it comes to any investment move he makes, says to buy the brazilian and watch out for inflation. he warns of a coming currency war after this weekend's g-20 meeting that sent the yen as we showed you at the top of the program, near a 33 week low even as g 20 ministers say please don't use the term currency war. you can think it but you can't use it. and he points to the mexican peso for the next currency play. it's been looking extremely strong over the past six months. let's get to my next guest who -- who agrees only in part with bill gross but has ideas of his own. chief currency strategist at bank of new york melon. good to have you here. >> thank you. liz: people are constantly looking for yield and you could argue if the yen is dropping 33% against the dollar over the past several months, there's some yield right there, if you short the yen. >> absolutely. you know, the way that most investors look at equities

plus later on our special coverage, does pimco's bill gross believe in the rally?rised by his answer. he's going to join us exclusively after the bell. you are watching cnbc, first in business worldwide. ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the new c-class is no exception. it's a mercedes-benz through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. executor of efficiency. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national. because only national lets you choose any car in the aisle...and go. you can even take a full-size or above, and still pay the mid-size price. now this...will work. [ male announcer ] just like you, business pro. just like you. go national. go like a pro. [ babies crying ] surprise -- your house was built on an ancient burial ground. [ ghosts moaning ] surprise -- your car needs a new transmission. [ coyo

to ask you a little bit about a gloomy assessment that came out from bill gross the bond guru from pimco. his february letter, he is saying he's to the buying into the bull market telling investors that stocks pose too much of a risk for too little return. he says buy something you can sink your teeth in commodities like gold. he also recommends to go out the u.s. and buy global stocks and currencies from countries like the ones he mentioned, australia brazil mexico and canada. what do you think of that bill growth assessment? >> well, you know n my opinion, and really for our clients here as wells fargo advisors, i mean i still firmly believe that one of the best way force people to build wealth over time build wealth for retirement is building to be by owning equities. i certainly think they need to own a good chunk of u.s. equities. now saying that, the growth we have hundreds of millions of people around the world that are coming into the middle class. their wages are rise. they want cars washing machine all the things we take for granted that is where the growth is going to be. we'r

to ask you a little bit about a gloomy assessment that came out from bill gross, the bond guru from pimco. his february letter, he is saying he's to the buying into the bull market, telling investors that stocks pose too much of a risk for too little return. he says buy something you can sink your teeth in, commodities like gold. he also recommends to go out the u.s. and buy global stocks and currencies from countries like the ones he mentioned, australia, brazil, mexico and canada. what do you think of that bill growth assessment? >> well, you know n my opinion, and really for our clients here as wells fargo advisors, i mean i still firmly believe that one of the best way force people to build wealth over time, build wealth for retirement is building to be by owning equities. i certainly think they need to own a good chunk of u.s. equities. now saying that, the growth, we have hundreds of millions of people around the world that are coming into the middle class. their wages are rise. they want cars, washing machine, all the things we take for granted that is where the growth is going to

street, we see the market move against them, suddenly after all of the geniuses whether it is from pimco, whoever it may be talking down stocks and all of a sudden sitting at 90 points from the high. don't you love that? >> i think the stock market and risk market generally responding to signs the economy is doing a little bit better. lou: we have people running around with this risk on, risk off nonsense again. who are these geniuses who haven't gotten it right for so long now that must be flat or oak. -- broke. lou: every time the italians. >> i know. it conjured worries about the european budget. lou: i don't see a european crisis, i see a european recession. what in the world are people doing here? we have earnings that are solid, there is even muster around them. it isn't just savings from the bottom line here. this is good stuff, why aren't people talking about it? >> i don't think everybody is. lou: a slight exaggeration. >> some people are talking about some of the things you're mentioning that the lack, but there are some worries. the uncertainty that is casting is another bit o

so we can play in a lot of the sectors where the pimcos, the black rocks play.n was in the corporate arena. we were overweight financials in investment grade corp operates. overweight single b and double be. bank loans. we're starting to do an active rotation out of high yield. >> the rotation, everybody comes on the air, as you know, and says we're in a bond bubble. you're a bone manager. you have to put bond capital to work every day. number one is this a bond bubble. when you look at the correlations things what interest rates are versus the s&p what does the world look like to you today 2013? >> really good question. if you look at interest rates in general which is the single biggest risk to the bond market, if you look at the fed with no exit strategy that says to me people anticipate the fed to get out of the market sooner rather than later it ultimately creates inflation what does that do? it's an asymmetric risk to the bond curve. what you want to do in that case is be short in duration. a bond manager like myself would recommend some multisector produc

and pimco's bill gross has produced his skepticism that the much discussed rotation out of bonds intoening. the so-called bond king said fund flows at pimco show little signs of rotation and cash money markets may be the source of this. todd horowitz at the cms trading group joins us with his own views, as well. rather than the rotation out of bonds within it seemed fixed income investor res going for riskier investments. i hear structural products are making a comeback. good morning, ross. everyone is trying to figure out a meal to get their money and they haven't been able to find it. >> how wide are you? are we building up a future problem here? are we building up another credit bubble? >> i believe that we are building a bubble here. i think this is an artificial bull run with the ever chase for yield. however, you've got to stay with it been but you've got to be very occasionus in here. and i think that, you know, today's jobs number is going to tell a big story. we had a week coming back. we had rotten consumer confidence, wiped out all of 2012's gain. we had a lousy gdp number.

plus pimco's bill gross joins us. and bob doll calling the rally. find out his next big prediction.treet signs," guys? >> we will throw? some suns shines for you today. i brought it all the way back from san diego for you. right now, up by 6.5% on earnings. eps of 26 cents topping estimates sales 1.1 billion. also, about the consensus. crane revenue up high. single digits. that is a sentence i never thought i would say. >> mechanical or bird? >> the orguaymi bird from japan. >> good enough. >> no sunshine there. about 30 degrees in wisconsin today, below 0. markets moving higher with hedge funds and world's biggest money manager riding the rally. cape kelly to tell us where they are putting their money -- who? >> we are talking about everyone. hedge fund, pension funds and world's biggest money manager. let me start with hedge funds. today i've been talking to folks about who called this rally and have ridden it straight up the dow to 14,000 as of today. leon cooperman is one of the ring leaders. bullish equities for more than a year and has returns to prove it. i'm sorry. also up a

rob arnott runs a couple of p pimco funds with $130 billion under management. >> good to join you.hy is now the time to sell u.s. stocks? make your case. >> well, we see some long-term headwinds coming our way. demography alone points to real gdp growth of 1%. well, the working age population will be growing 1% a year slower than in the year. there goes 1% of gdp growth and the workforce is older. older people are more productive but their productivity growth rate is slower. so they're a great source of gdp but not a great source of gdp growth. put those together with the headwinds attached to our addiction of debt finance consumpti consumption, deficit spending and we have some daunting headwinds. >> i don't think anything you're saying is new to anybody when they cite what's facing the market. the market has had at least a remarkable ability to look past all of the noise, including many of the things you cite. simon baker wants to take issue with something specific you said. >> you want to get out of the u.s. markets and you want to get in high yield bonds. it seems a little conf

bill gross of pimco, the bond king himselves with here's what he had to say on twitter. are italians voting for austerity, prosperity, or promiscuity? we have our own worries on this side of the atlantic. the across the board spending cuts due on friday. due on march 1st. you add it up, you saw the vix, the fear gauge surged. that was the biggest pop since august 18th, 2011. the industrial average that had been up 81 points finishes down. the s&p 500, your benchmark gauge finishes down 27 points at 1487. financials, energy, materials, the worst performing sectors. the nasdaq down 1.4% at 3116. back to you. >> all right, josh. thanks very much. we'll be checking back. you to figure out what's going on here as many of these averages and indicators are taking us back as we finish up february to levels we haven't seen since the beginning of the year. >>> when we come back, the fed starting to think about backing off of its aggressive long-term interest rate. that's what was suggested in the minutes from last week. our steve leisman is reading the tea leaves. we're also talki

pimco and double line are both invaulg close-end funds that will buy junk bonds on leverage, not enoughthey are buying junk bonds at near record low yield and call protection, they are also applying leverage to this non-value proposition. it seems that the world sen thralled to yesterday's idea, yesterday's idea being that interest rates always and everywhere decline. i remember distinctly that they went up once. >> there's some debate about the fed stimulus obviously and little debate about the fact that the fed stimulus is propelling this market because we're still sketchy in terms of the fundamental, you know, changes in economic improvement, but let me get your take. do you think it's all about where rates are in terms of these? the flow that we saw today, the big deal, berkshire acquiring heinz, big deal in the airline industry. what do you think is behind that? >> i'm not sure about the valuations of those two companies, but i do know about the valuations of securities with which these deals are financed. you can borrow and there's a mad, mad rush for new loans to stock called col

on top of that, pimco will be launching a new actively managed currency etf. back to you. >> joining us now for more is jeff molatori. one of the top three etf providers in the world alongside blackrock and stage street. they control more than 8el 0% of assets under management. jeff, welcome. >> thank you. >> thank you. >> so i guess some of the questions in this industry are more about how stable is it from your point of view with the cost cutting that we've seen in order to entice investors? how do you keep clients coming without undercutting your own profit model? >> we're a little different because we're owned by our own investors. so our model in terms of profit versus state street or shares are very different. we welcome you and costs are going down. that will be better for investors and at times, at any times costs or critical elements in terms of getting net return for investors. but at this point in time, we're really happy. we think it's good for investors. >> what is your business model, then? >> vanguard investors, vanguard funds which own the vang

the seller is none other than bill gross, the pimco founder. great investment ideas over the years. but it will cost you, $24 million. chances are this will be a vacation home since there are very few offices or industries in pebble beach. >> no one gets transferred to pebble beach. >> joe, maybe you could get the transfer to pebble beach. maybe this would be a first. you'd be the first transfer to pebble beach and bill gross could give you a deal on that $24 million house. he's a friend of cnbc's. >> yeah, i get transferred at least for the week. you've shown us apartments in new york that cost $100 million. >> yeah. >> so that mansion -- >> yeah, but where would you rather be, joe? it's a value out there. >> i know, $24 million with a view of the ocean, and you know, living near monterey or four times as much for, you know, for being locked on the upper east side. >> as long as you don't have to pay the california taxes it's a great place to visit. >> that's a good point. thanks, robert. coming up, another big hour live from pebble beach. mor

pimco. >> the nar just about an ad today,, they say that fha provides access to credit for millions of americans exactly the way congress decided to operate 80 years ago. i went back and looked. 80 years ago, the maximum loan term was 20 years. now it is 30 years. insurance claim rate -- .2% in the lives of over 20 years versus 11% annual now. the loss rate has increased 400 times. >> thank you. important points. i appreciate. >> the time of the gentleman has inspired -- expired. as you know, votes are anticipated on the floor shortly, perhaps as early as 11:00 a.m. we will clear one more member on each side and adjourn at that point. i understand the democrats have their retreat today. we will not be dabbling back in. we will recognize the gentleman from new york, mr. meeks. you can probably figure out whether or not you will be recognized. >> i want to thank you chairman and ranking member for this hearing. let me ask some quick questions. i know the ranking member of of housing is chomping at the bit over here. i will try to give him a couple minutes. i just heard mr. sanders -- you